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Oil price falls as Nigerian strike ends

Oil prices have eased as Nigerian unions called off a general strike without disruption to supply from Africa's biggest oil exporter.

12 Jun 2004 10:38 GMT

Union action in Nigeria has been fuelling oil supply worries

London benchmark Brent crude futures were down 29 cents at $35.45 a barrel after rising about half a dollar on Thursday.

US markets were shut for the funeral of former President Ronald Reagan.

Supply worries got some relief as Nigeria's main umbrella labour union suspended on Friday a three-day-old general strike, saying the government had complied with a court order to force down fuel prices.

"We have no reason to continue the protest. We have agreed to ... suspend the strike," said Nigeria Labour Congress (NLC) leader, Adams Oshiomhole in the commercial capital Lagos.

The strike did not affect oil supplies from Nigeria, a member of the OPEC cartel and a large supplier to the United States.

Prices have retreated from recent peaks after OPEC assured markets of extra supplies of crude and US supply stocks have gradually crept higher.

Record high

US prices hit a record of $42.45 a barrel early this month while Brent soared to a new 13-year high of $39.12 after the end of May attacks on foreign workers in Saudi Arabia underscored the risks to supplies from the kingdom.

Saudi Arabia has boosted its production to over nine million barrels per day in June to help cool prices.

"Tense geopolitics should provide some support for prices despite the clear Saudi intention to cool the markets," Deutsche Bank analyst Adam Sieminski wrote in a report. "Even at a lower $35 Brent the geopolitical premium remains."

Prices are being underpinned by roaring world oil demand, which the International Energy Agency has estimated as growing at the fastest rate since 1980.

OPEC members Iran and Kuwait have followed Saudi Arabia in providing Asian oil refiners with full contract volumes as part of the cartel's pledge to hike its output ceiling by two million bpd from 1 July.